N.Y. Insurance Law § 7815: Stranger-originated life insurance

§ 7815. Stranger-originated life insurance. (a) In this chapter,

"stranger-originated life insurance" means any act, practice or

arrangement, at or prior to policy issuance, to initiate or facilitate

the issuance of a policy for the intended benefit of a person who, at

the time of policy origination, has no insurable interest in the life of

the insured under the laws of this state, including:

(1) the purchase of life insurance with resources or guarantees from

or through a person that, at the time of policy initiation, could not

lawfully initiate the policy;

(2) an arrangement or other agreement to transfer the ownership of the

policy or the policy benefits to another person; or

(3) a trust or similar arrangement that is used, directly or

indirectly, for the purpose of purchasing one or more policies for the

intended benefit of another person in a manner that violates the

insurable interest laws of this state.

(b) Stranger-originated life insurance arrangements do not include

lawful life settlement contracts as permitted by this article or those

practices set forth in paragraph three of subsection (k) of section

seven thousand eight hundred two of this article, provided that such

contracts or practices are not for the purpose of evading regulation

under this article.

(c) No person shall directly or indirectly engage in any act, practice

or arrangement that constitutes stranger-originated life insurance.

(d) The failure to follow the provision of subsection (c) of this

section shall be a defined violation under article twenty-four of this

chapter.